Analysis: Menendez goes to bat for big donors

Being a prodigious fundraiser helped Sen. Bob Menendez move up the ladder from the Union City school board to the U.S. Senate elite. But he also has faced criticism for advocating policies that helped the people who gave him money, or soliciting contributions from beneficiaries of his efforts.

There was the $295,000 he received from biotech companies and hospital PACs. The senator later authored tax breaks for biotech companies.

There was the $825,000 he received from contractors and landowners who benefited from the development of a Hudson County light rail system. The senator fought for federal money to get it built.

There was the $13,700 contributed to Menendez by a Hackensack company that makes artificial knees.

The senator urged the Food and Drug Administration to license the product. And the company hired his former chief of staff as a lobbyist.

In a political career marked by advocacy for his donors, the relationship between an eye doctor named Salomon Melgen stands out — especially in the new era of campaign finance that allowed Melgen to donate $700,000 to an independent “super PAC” that spent nearly $600,000 on the senator’s reelection last year.

Menendez’s ethical woes got worse when news broke that he pressed the State Department on a contract dispute involving a Dominican company partly owned by Melgen, the friend and major contributor who gave Menendez free, unreported flights in his private plane.

His decision to pay $58,500 from his own pocket more than two years later does not change the fact that he took free flights on a private jet belonging to Melgen in 2010. Those flights either were prohibited by ethics rules or should have been promptly disclosed — and weren’t — on his signed personal financial statement.

Menendez says the trips “fell through the cracks” during a year when he had a hectic travel schedule, and that the payment to correct the “mistake” should put the issue to rest.

The ethics committee may not agree. And a leading ethics watchdog also wants the panel to probe Menendez’s use of his power as a subcommittee chairman to press the State Department to help a company tied to Melgen with a contract dispute in the Dominican Republic.

Menendez’s office did not respond to a request for an explanation of how he separates the interests of his contributors from the issues he advocates. But when he has been questioned about these actions before, he or his spokesmen have responded that he was serving constituents, or argued that the policy decisions were coincidental to the contributions.

On Thursday, Menendez acknowledged that his office contacted U.S. health agencies on behalf of Melgen but denied to The Associated Press that he sought to intervene improperly in billing disputes between the doctor and the government.

Menendez said he contacted the U.S. Centers for Medicare and Medicaid Services to ask about billing practices and policies. The contacts came during a dispute between CMS and Melgen. The FBI searched Melgen’s offices last week.

“The bottom line is, we raised concerns with CMS over policy and over ambiguities that are difficult for medical providers to understand and to seek a clarification of that and to make sure, in doing so, providers would understand how to attain themselves,” Menendez said.

Reviewing the past fundraising connections to Menendez’s congressional agenda that sparked criticism may help to explain what some watching his current troubles have wondered: How can a smart lawyer who must have known the rules do things related to Melgen that now leave him exposed to possible Senate admonishment, and unknown political damage?

Some of those connections include the major overhaul of health insurance known as Obamacare, which included provisions Menendez authored that provided tax breaks for biotechnology companies and higher Medicare reimbursements for urban hospitals. And biotech company PACs and employees gave at least $95,000 toward his reelection last year, while hospital PACs and employees gave more than $200,000.

Menendez also introduced a bill to relax rules on foreign investment in commercial real estate, and the head of the Real Estate Roundtable raised $32,000 in contributions for him last spring, while the National Association of Realtors “bundled” an additional $21,000 in late 2011.

And he wrote a letter to the Federal Reserve supporting the sale of a troubled Elizabeth bank whose executives had contributed more than $50,000 over his career. He reintroduced a bill in July 2008 to legalize Internet poker, and deposited nearly $16,000 in contributions from professional poker players a month later.

Fred Wertheimer, president of the non-profit Democracy 21, a nationally recognized campaign finance reform advocacy group, said there are many examples of members of Congress advocating for or setting policies that are favorable to their donors.

But Menendez may have crossed a line with Melgen, because of the size of contributions involved and the use of a committee hearing to advance his interests, Wertheimer said.

At a July hearing Menendez convened as chairman of the Western Hemisphere subcommittee, officials from the Commerce and State departments were questioned about policies to improve “doing business in Central America,” especially in light of a dramatic increase in investment in the region by China.

But at one point Menendez also questioned the officials about “another company that has American investors” and a contract the Dominican government is not honoring to conduct X-rays of all cargo going to the ports.

He asked a State Department undersecretary what the U.S. government was “willing to do” to help the company. He never named the company, but published reports have said it is ICSSI, and that Melgen is a major investor.

In recent years, Melgen and his family have been major financial backers of Menendez’s. They gave nearly $99,000 to his campaign committees or the Democratic State Committee in years he was running for Senate. They also gave $60,000 to the Democratic Senatorial Campaign Committee when Menendez was its chairman. And they were the single largest donors, giving $40,000, to a committee Menendez created to fund a legal defense fund against efforts to recall him.

On top of that, Melgen’s company, Florida-based Vitreo-Retinal Consultants, gave $700,000 last year — $300,000 of it after the hearing — to Majority PAC, a Democratic “super PAC” that spent nearly $600,000 on voter outreach last year in support of Menendez.

Melgen and his company have also been generous to other Democrats in New Jersey in recent years, according to campaign finance records.

In May, when Menendez was running for a second term, Salomon Melgen, his wife, Flor, and their daughter, Melissa, each gave $10,000 contributions to the New Jersey State Democratic Committee’s federal account, Federal Election Commission records show.

And Vitreo-Retinal Consultants made $25,000 contributions in 2007 to both the state Senate Democratic Majority and the state Assembly Democratic Campaign Committee, two powerful political funds in New Jersey, according to the New Jersey Election Law Enforcement Commission.

State records show contributions from Vitreo-Retinal Consultants to various local Democratic groups in 2012. Passaic County Democrats were given $37,500, while Camden and Essex each received $25,000 and an additional $16,500 went to Union County.

Menendez said last week that he did not know who Majority PAC’s contributors were, but Wertheimer said it is notable that the super PAC got Melgen’s money and spent it in Menendez’s race, where he had a comfortable lead in polls, instead of in more closely contested Democratic races.

He also said the case is more serious than others involving general contributions because regular campaign finance laws limit donors to giving no more than $2,500 in a primary and $2,500 in a general election, while the limits are $5,000 per election for PACs.

“We have contribution limits precisely because Congress was concerned about large contributions being used to obtain influence,” Wertheimer said.